New figures show how much the pension could increase by next year
The state pension may is likely to increase by £488 next April reaching £13,036.40 per year, according to new official figures. Under the triple lock pension guarantee, the annual uplift is determined by whichever is highest out of average wage growth, inflation or 2.5%.
Average wage growth, including bonuses, eased to 3.9% between May and July this year, according to the Office for National Statistics, however it continues to outpace inflation, which currently stands at 2.9%.
Labour made a manifesto commitment to maintain the triple lock which is something Prime Minister Andy Burnham has pledged to honour, though the expense of the policy has faced increasing scrutiny as the number of pensioners is projected to grow in the years ahead. For the biggest stories in Wales first sign up to our daily newsletter here
Ruth Curtice, chief executive of the Resolution Foundation, speaking to the BBC’s Today programme said the triple lock is generating a “ratchet effect” where “pensioners’ living standards grow even faster than just a typical worker.”
Curtice said: “It’s not affordable in any situation to simply have pensions rising faster than earnings because earnings are a big part of the tax base.
“Pensioners have seen living standards grow three times more than typical workers over the last 20 years.”
Nearly 13 million people in the UK currently receive the state pension. Should it rise by 3.9%, the flat-rate state pension would exceed the personal allowance threshold of £12,570, making it liable for income tax.
The Labour government has previously pledged that pensioners who depend entirely on the state pension would neither be required to submit a tax return nor be pursued for payment.
The rise to next year’s state pension will not be confirmed until September’s inflation figures are released in October. Inflation currently stands at 2.9% and is not anticipated to exceed the wages figure.
This means that the flat-rate state pension for those who reached state pension age after April 2016 will likely be £250.70 a week, or £13,036.40 a year, an increase of £488.
The old basic state pension for those who reached state pension age before April 2016 will likely be £192.10 a week, or £9,989.20 a year, an increase of £374.40.
The ONS also released data on the UK labour force that showed while the unemployment rate remained steady at 4.9%, both the number of vacancies and employees on payrolls declined in recent months.
